DEA Proposes Rules Allowing for Continued but Limited Flexibility for Medical Practitioners to Prescribe Controlled Substances via Telehealth Encounters
— On March 1, 2023, the Drug Enforcement Administration (DEA) published two proposed rules that would expressly authorize telemedicine prescribing of medications that are controlled substances, but only in circumstances that generally require at least one in-person patient visit with very limited exceptions. The proposed rules unwind certain telemedicine policies permitted during the COVID-19 public health emergency while maintaining some of those flexibilities moving forward. These proposed rules offer more flexibility in telemedicine prescribing compared to pre-pandemic, but will likely increase patient and health system burden and could create confusion about how lawfully to prescribe medications that are controlled substances.
King & Spalding’s Client Alert on the proposed rules is available here.
DOJ Wins $43 Million Verdict Against Ophthalmology Distributor In FCA Anti-Kickback Statute Case—On February 28, 2023, a jury in the United States District Court in Minnesota issued a $43 million verdict in favor of the plaintiffs in United States ex rel. Fesenmaier v. Cameron-Ehlen Grp, a False Claims Act (FCA) suit alleging that the defendants, including a distributor of ophthalmological supplies and its majority owner, violated the federal Anti-Kickback Statute, 42 U.S.C. Section 1320a-7b(b).
Defendant, The Cameron-Ehlen Group, Inc., d/b/a Precision Lens, is a distributor of intraocular lenses and other products used in ophthalmological surgeries. The relator filed suit in November 2013, alleging that the distributor, suppliers, and others paid physicians in gifts, trips, cash payments pursuant to sham consulting arrangements, free or discounted equipment, and other valuable consideration to induce them to use the suppliers’ and distributors’ products in their ophthalmological procedures. The kickbacks paid to the physicians included high-end skiing, fishing, hunting, and other vacations, including to the College Football National Championship and the Masters golf tournament. The procedures were reimbursed by federal healthcare programs, including Medicare and Medicaid.
The relator had first raised his concerns in conversation with the FBI sometime in 2010, and he had continued to communicate with the FBI for several years thereafter. In a 2012 Chapter 7 Bankruptcy filing, however, the relator failed to disclose the potential legal claim as an asset to the bankruptcy trustee. That failure was the basis of a motion for summary judgment brought by defendants, who argued that judicial estoppel prohibited the relator from asserting a claim in the FCA case that he told the Chapter 7 Bankruptcy Trustee did not exist. The Court denied that motion in an August 2020 ruling.
After a 7-week trial, a federal jury found The Cameron-Ehlen Group, Inc. and its majority owner jointly liable for causing the submission of 64,575 false claims to Medicare, resulting in damages of $43,694,641. Under the FCA, the damages determined by the jury will be trebled, and each false claim found by the jury is subject to a potential civil penalty ranging from $5,500 to $11,000. The jury verdict means that the two defendants may be liable for anywhere between $355 million to $710 million after accounting for trebling and civil penalties under the FCA.
The relator’s share of the verdict will be anywhere from 15% to 25% of the total proceeds depending on his contributions to the case. The relator had received 19.5% of the proceeds from two earlier settlements with two of the defendants in the case.
The DOJ’s press release announcing the verdict is available here. The First Amended Complaint in the case is available here. The Court’s ruling on defendants’ motion for summary judgment as to the relator is available here.
Reporter, David Tassa, Los Angeles, +1 213 442 8848, firstname.lastname@example.org
OIG Issues Favorable Opinion Regarding Pharmaceutical Company’s Free 14-Day Drug Supply to Patients Experiencing a Delay in Coverage – On February 28, 2023, OIG posted Advisory Opinion 23-02, responding to a request by a pharmaceutical company (the Company) regarding its proposal to offer a free 14-day supply of an enzyme replacement therapy drug to patients experiencing a delay in coverage determination for the drug. Although OIG considered this arrangement to be “remuneration” within the meaning of the Federal Anti-Kickback Statute (AKS) and the Civil Monetary Penalty Law (CMP), OIG ultimately determined the proposed arrangement presented a low risk of fraud and abuse. Citing several factors that mitigated the risk of abuse in the arrangement, OIG determined that it would not impose administrative sanctions on the Company in connection with the AKS or CMP.
The drug, which the Company acquired in November 2020, is FDA-approved with a sole indication for the treatment of a specific genetic condition that is typically diagnosed within a few months of birth and is fatal if left untreated. According to OIG, the Company certifies that the drug is the only currently available enzyme replacement therapy approved in the United States for treatment of the condition, and only about six to fifteen new patients are diagnosed with the condition per year in the United States.
Under the Arrangement, the Company provides a free 14-day supply of the drug to patients who are diagnosed with the condition, have received a prescription for the drug but have not previously treated with the drug, and have experienced a delay in coverage determination for a least 48 hours after the insurer received all required information. Patients are eligible for one additional 14-day supply if they are still awaiting a coverage determination or appealing a denial of coverage.
OIG stated that the proposed arrangement implicates the AKS because the remunerative value of the free drug could induce purchases of the drug, which may be paid by Medicare or Medicaid. However, OIG determined that because the arrangement presents a low risk of fraud and abuse under the AKS, OIG would not impose sanctions under the AKS. OIG identified several factors supporting its decision:
- The arrangement is unlikely to lead to overutilization of the drug because the drug’s sole FDA-approved indication is for treatment of a specific genetic condition, the arrangement is limited to a 14-day supply and possible refill to patients diagnosed with the condition and experiencing a delay in coverage determination, and patients who receive the free drug supply would be subject to any cost-sharing after the free doses.
- Because the arrangement is available only in the event of a coverage delay, patients and prescribers likely assume that the patient’s insurance will cover the drug and that the patient will be subject to applicable cost-shares. OIG thus considers the arrangement is distinguishable from “seeding” programs where a manufacturer might offer a free or discounted drug to induce a patient onto the drug for future purchases.
- Under the arrangement, the prescriber receives no financial benefit, because the drug is dispensed directly to the patient and the prescriber is prohibited from billing an administration fee.
- The arrangement involves no cost to Medicare, and no patient, pharmacy, payor, or other third party is billed for the free drug supply or administration of the drug.
- The arrangement does not obligate the patient to continue obtaining the drug or any other service from the pharmacy that dispenses the drug to the patient.
OIG also determined that the proposed arrangement would not generate prohibited renumeration under the CMP because it is not likely to influence a patient to purchase the drug from a particular pharmacy, given that there is only one pharmacy that dispenses the drug, and all patients prescribed the drug must obtain it from the pharmacy.
OIG advises that the Advisory Opinion may not be relied upon by anyone other than the Company. A copy of Advisory Opinion 23-02 is available here.
Reporter, Jason A. de Jesus, Los Angeles, +1 213 443 4343, email@example.com.
Bipartisan Senators Seek Stakeholder Input to Draft Legislation to Address Health Care Workforce Shortage—On February 16, 2023, the Senate Health, Education, Labor, and Pensions (HELP) Committee held a hearing concerning the current health care workforce shortage. On March 2, 2023, Chairman Sanders and Ranking Member Cassidy of the HELP Committee requested input from health care stakeholders on the causes of and potential solutions to the shortages. The Senators plan on identifying and developing bipartisan legislative solutions to improve the workforce shortages.
This is a great opportunity for stakeholders to have their voices heard and share their perspectives on this important issue. King & Spalding’s Government Affairs Group can assist with an approach, strategy, and messaging for these responses.
Reporter, Lindsay Greenblatt, Los Angeles, +1 213 218 4032, firstname.lastname@example.org. Contacts: Allison Kassir, +1 202 626 5600, AKassir@KSLAW.com, Scott Dziengelski, +1 202 661 7866, email@example.com.
University of Pittsburgh Medical Center Settles Overlapping Surgery False Claims Act Case – On February 27, 2023, the Department of Justice announced that James L. Luketich, M.D., the University of Pittsburgh Medical Center (UPMC), and University of Pittsburgh Physicians (collectively, Defendants) finalized an $8.5 million settlement to resolve a False Claims Act (FCA) lawsuit involving overlapping surgeries. In addition to a financial resolution, the settlement agreement contains certain integrity provisions including a year-long audit of Dr. Luketich’s professional fee Medicare claims. This settlement underscores the continued government enforcement focus on overlapping surgeries.
The FCA lawsuit was initially filed by Dr. Jonathan D’Cunha, a former UPMC surgeon. In 2021, the United States filed a complaint in partial intervention, as described here. Allegations in the case included that Dr. Luketich – the longtime chair of UPMC’s Department of Cardiothoracic Surgery – regularly performed three surgical procedures at the same time, failed to participate in all of the “key and critical” portions of his surgeries, and his patients experienced medically unnecessary anesthesia time as a result of his surgical practices. The United States contented that these practices violated CMS rules for professional fee billing for teaching surgeries. In the settlement, the Defendants did not admit liability.
In addition to the $8.5 million settlement, the settlement agreement requires the creation of a Corrective Action Plan for Dr. Luketich, as well as a year-long, third-party audit of Dr. Luketich’s physician fee services billings to Medicare. The Defendants were also added to OIG’s High Risk - Heightened Scrutiny list, available here. The settlement agreement further provides that UMPC may request information, guidance, assurance and/or an advisory opinion from CMS regarding Medicare regulations pertaining to teaching and overlapping surgeries, to which CMS shall respond in writing.
The Department of Justice Press Release is available here.
Reporter, Lauren S. Gennett, Atlanta, + 1 404 572 3592, firstname.lastname@example.org.
Also In The News:
32nd Annual Health Law & Policy Forum
Join us Monday, March 20, 2023, for our annual forum focusing on the foremost legal and political developments impacting the healthcare industry. The event will be hosted at the St. Regis Atlanta Hotel.
- Secretary Kathleen Sebelius speaking on the future of health policy
- Leading practitioners providing policy and regulatory enforcement updates, and other industry developments
- How changes in antitrust policy and enforcement are impacting the healthcare industry
- Democrats in the Senate and Republicans in the House: Healthcare in a divided Congress
To register for this year's event, please click here.
Supreme Court Ruling in AHA v. Becerra May Affect 340B Hospitals' Reimbursement Rights Against Medicare Advantage Plans— Hospitals that participate in the 340B program may be entitled to additional monies from Medicare Advantage plans in the wake of the Supreme Court’s decision in AHA v. Becerra. More »